Assume the Quantity of Good X Is Measured on the Horizontal

question 74

Multiple Choice

Assume the quantity of good X is measured on the horizontal axis and the quantity of good Y on the vertical axis.Initial prices are PX = $5 and PY = $10.The consumerʹs income is $100.If PY increases to $20,then

• A)the entire budget line shifts parallel toward the origin.
• B)the budget line will rotate toward the origin,slope remaining constant.
• C)the budget line will rotate toward the origin with the slope changing from 1/2 to 1/4 (in absolute values).
• D)the entire budget line shifts parallel away from the origin.
• E)the budget line will rotate away from the origin with the slope changing from 1/4 to 1/2 (in absolute values).

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Definitions:

Purchasing Department

A division within a business that is responsible for acquiring goods and services needed for operations.

Standard Cost

A predetermined cost of manufacturing a product or providing a service, used for budgeting and performance evaluation.

Predetermined Cost

An estimated cost calculated in advance of production, used for budgeting and cost control purposes.

Negative Effects

Undesirable impacts or outcomes that result from a specific action, event, or set of circumstances.